IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v59y2021i1p95-118.html
   My bibliography  Save this article

Do Taxes On Soda And Sugary Drinks Work? Scanner Data Evidence From Berkeley And Washington State

Author

Listed:
  • Christian Rojas
  • Emily Wang

Abstract

We study two beverage taxes: the SSB tax of 1¢/oz in the city of Berkeley (in effect since 2015) and the temporary 2010 soda tax of 0.166¢/oz in Washington State. Using detailed scanner data, we find that prices in Washington reacted sharply and promptly (often by a larger magnitude than the tax), whereas retail prices in Berkeley reacted marginally (by less than 30% the magnitude of the tax). Further, we find a 5% volume reduction in Washington but fail to detect an effect in Berkeley. We discuss the possible causes for the discrepancy in effectiveness, in particular cross‐border shopping. (JEL H22, L66, I18)

Suggested Citation

  • Christian Rojas & Emily Wang, 2021. "Do Taxes On Soda And Sugary Drinks Work? Scanner Data Evidence From Berkeley And Washington State," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 95-118, January.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:1:p:95-118
    DOI: 10.1111/ecin.12957
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecin.12957
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecin.12957?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jakina Debnam, 2017. "Selection Effects and Heterogeneous Demand Responses to the Berkeley Soda Tax Vote," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(5), pages 1172-1187.
    2. Rebecca L. C. Taylor & Scott Kaplan & Sofia B. Villas‐Boas & Kevin Jung, 2019. "Soda Wars: The Effect Of A Soda Tax Election On University Beverage Sales," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1480-1496, July.
    3. John Cawley & David Frisvold & David Jones, "undated". "The Impact of Sugar-Sweetened Beverage Taxes on Purchases: Evidence from Four City-Level Taxes in the U.S," Mathematica Policy Research Reports c082eda4528243fba6be6c99f, Mathematica Policy Research.
    4. Matthew Harding & Ephraim Leibtag & Michael F. Lovenheim, 2012. "The Heterogeneous Geographic and Socioeconomic Incidence of Cigarette Taxes: Evidence from Nielsen Homescan Data," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 169-198, November.
    5. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    6. Vartanian, L.R. & Schwartz, M.B. & Brownell, K.D., 2007. "Effects of soft drink consumption on nutrition and health: A systematic review and meta-analysis," American Journal of Public Health, American Public Health Association, vol. 97(4), pages 667-675.
    7. Senarath Dharmasena & Oral Capps, 2012. "Intended and unintended consequences of a proposed national tax on sugar‐sweetened beverages to combat the U.S. obesity problem," Health Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 669-694, June.
    8. Stefano DellaVigna & Matthew Gentzkow, 2019. "Uniform Pricing in U.S. Retail Chains," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 2011-2084.
    9. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    10. Emily Wang & Christian Rojas & Francesca Colantuoni, 2017. "Heterogeneous Behavior, Obesity, and Storability in the Demand for Soft Drinks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 18-33.
    11. Liran Einav & Ephraim Leibtag & Aviv Nevo, 2010. "Recording discrepancies in Nielsen Homescan data: Are they present and do they matter?," Quantitative Marketing and Economics (QME), Springer, vol. 8(2), pages 207-239, June.
    12. Emily Yucai Wang, 2015. "The impact of soda taxes on consumer welfare: implications of storability and taste heterogeneity," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 409-441, June.
    13. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    14. Francesca Colantuoni & Christian Rojas, 2015. "The Impact Of Soda Sales Taxes On Consumption: Evidence From Scanner Data," Contemporary Economic Policy, Western Economic Association International, vol. 33(4), pages 714-734, October.
    15. Jacobson, M.F. & Brownell, K.D., 2000. "Small taxes on soft drinks and snack foods to promote health," American Journal of Public Health, American Public Health Association, vol. 90(6), pages 854-857.
    16. Andreyeva, T. & Long, M.W. & Brownell, K.D., 2010. "The impact of food prices on consumption: A systematic review of research on the price elasticity of demand for food," American Journal of Public Health, American Public Health Association, vol. 100(2), pages 216-222.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Goncalves, Judite & Merenda, Roxanne & dos Santos, João Pereira, 2022. "Not so sweet: The impact of the Portuguese soda tax on producers," Ruhr Economic Papers 938, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Zhai, Tianchang & Li, Lei & Wang, Jingjing & Si, Wei, 2022. "Will the consumption tax on sugar-sweetened beverages help promote healthy beverage consumption? Evidence from urban China," China Economic Review, Elsevier, vol. 73(C).
    3. Friberg, Richard & Halseth, Emil M. Strøm & Frode, Steen & Ulsaker, Simen A., 2022. "The effect of cross-border shopping on commodity tax revenue: Results from a natural experiment," Discussion Paper Series in Economics 9/2022, Norwegian School of Economics, Department of Economics.
    4. He, Xiaoyang & Balagtas, Joseph V., 2022. "Spatial retail competition reduces the effects of soda taxes on price and quantity: Evidence from the Philadelphia Beverage Tax," Food Policy, Elsevier, vol. 112(C).
    5. Andrew T. Ching & Daniel Goetz, 2024. "Consumption Responses to an Unpopular Policy: Evidence from a Short-Lived Soda Tax," Marketing Science, INFORMS, vol. 43(6), pages 1204-1225, November.
    6. Goncalves, Judite & Merenda, Roxanne & Pereira dos Santos, João, 2023. "Not So Sweet: Impacts of a Soda Tax on Producers," IZA Discussion Papers 15968, Institute of Labor Economics (IZA).
    7. Tiboldo, G. & Castellari, E. & Moro, D., 2024. "The distributional implications of health taxes: A case study on the Italian sugar tax," Food Policy, Elsevier, vol. 126(C).
    8. Zhen, Chen & Chen, Yu & Lin, Biing-Hwan & Karns, Shawn & Mancino, Lisa & Ver Ploeg, Michele, 2021. "Do Obese and Nonobese Consumers Respond Differently to Price Changes? Implications of Preference Heterogeneity for Using Food Taxes and Subsidies to Reduce Obesity," MPRA Paper 112697, University Library of Munich, Germany.
    9. Judite Gonçalves & Roxanne Merenda & João Pereira dos Santos, 2024. "Not so sweet: impacts of a soda tax on producers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1388-1412, October.
    10. Zhang, Qi & McCluskey, Jill J. & Gallardo, R. Karina & Brady, Michael P., 2021. "Avoidance behaviors circumventing the sugar-sweetened beverages tax," Food Policy, Elsevier, vol. 105(C).
    11. John Cawley & David Frisvold & David Jones & Chelsea Lensing, 2021. "The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 987-1005, May.
    12. Chen Zhen & Yu Chen & Biing‐Hwan Lin & Shawn Karns & Lisa Mancino & Michele Ver Ploeg, 2024. "Do obese and nonobese consumers respond differently to price changes? Implications of preference heterogeneity for obesity‐oriented food taxes and subsidies," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1058-1088, May.
    13. Aaron Adalja & Jūra Liaukonytė & Emily Wang & Xinrong Zhu, 2023. "GMO and Non-GMO Labeling Effects: Evidence from a Quasi-Natural Experiment," Marketing Science, INFORMS, vol. 42(2), pages 233-250, March.
    14. Pourya Valizadeh & Shu Wen Ng, 2021. "Would A National Sugar‐Sweetened Beverage Tax in the United States Be Well Targeted?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 961-986, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cengiz, Ezgi & Cengiz, Doruk, 2020. "The Impacts of Soda Taxes in U.S. Localities," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304351, Agricultural and Applied Economics Association.
    2. Bryan Bollinger & Steven E. Sexton, 2023. "Local excise taxes, sticky prices, and spillovers: evidence from Berkeley’s soda tax," Quantitative Marketing and Economics (QME), Springer, vol. 21(2), pages 281-331, June.
    3. Hindriks, Jean & Serse, Valerio, 2019. "Heterogeneity in the tax pass-through to spirit retail prices: Evidence from Belgium," Journal of Public Economics, Elsevier, vol. 176(C), pages 142-160.
    4. Zhen, Chen & Chen, Yu & Lin, Biing-Hwan & Karns, Shawn & Mancino, Lisa & Ver Ploeg, Michele, 2021. "Do Obese and Nonobese Consumers Respond Differently to Price Changes? Implications of Preference Heterogeneity for Using Food Taxes and Subsidies to Reduce Obesity," MPRA Paper 112697, University Library of Munich, Germany.
    5. Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
    6. Alyssa J. Moran & Yuxuan Gu & Sasha Clynes & Attia Goheer & Christina A. Roberto & Anne Palmer, 2020. "Associations between Governmental Policies to Improve the Nutritional Quality of Supermarket Purchases and Individual, Retailer, and Community Health Outcomes: An Integrative Review," IJERPH, MDPI, vol. 17(20), pages 1-23, October.
    7. Anurag Sharma & Katharina Hauck & Bruce Hollingsworth & Luigi Siciliani, 2014. "The Effects Of Taxing Sugar‐Sweetened Beverages Across Different Income Groups," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1159-1184, September.
    8. Pourya Valizadeh & Shu Wen Ng, 2021. "Would A National Sugar‐Sweetened Beverage Tax in the United States Be Well Targeted?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 961-986, May.
    9. Emily Wang & Christian Rojas & Francesca Colantuoni, 2017. "Heterogeneous Behavior, Obesity, and Storability in the Demand for Soft Drinks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 18-33.
    10. Nguyen, Cuong Viet & Tran, Tuyen Quang & Van Vu, Huong, 2024. "The long-term effects of war on foreign direct investment and economic development: evidence from Vietnam," Journal of Urban Economics, Elsevier, vol. 143(C).
    11. Pierre Dubois & Rachel Griffith & Martin O'Connell, 2020. "How Well Targeted Are Soda Taxes?," American Economic Review, American Economic Association, vol. 110(11), pages 3661-3704, November.
    12. Zhigang Li & Hangtian Xu, 2018. "High‐speed railroads and economic geography: Evidence from Japan," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 705-727, September.
    13. Zhang, Yinjunjie & Palma, Marco A., 2018. "Revisiting the Effects of Sugar Tax on Demand Elasticities - Evidence from the BLP Demand Model," 2018 Annual Meeting, August 5-7, Washington, D.C. 273978, Agricultural and Applied Economics Association.
    14. John Cawley & David Frisvold & David Jones & Chelsea Lensing, 2021. "The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 987-1005, May.
    15. Kee, Jennifer & Segovia, Michelle S. & Saboury, Piruz & Palma, Marco A., 2022. "Appealing to generosity to reduce food calorie intake: A natural field experiment," Food Policy, Elsevier, vol. 110(C).
    16. Dietrichson, Jens & Ellegård, Lina Maria, 2015. "Assist or desist? Conditional bailouts and fiscal discipline in local governments," European Journal of Political Economy, Elsevier, vol. 38(C), pages 153-168.
    17. Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying & Hall, Kevin D., 2011. "Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax," Economics & Human Biology, Elsevier, vol. 9(4), pages 329-341.
    18. Eric James Stokan, 2019. "An Estimate of the Local Economic Impact of State-Level Earned Income Tax Credits," Economic Development Quarterly, , vol. 33(3), pages 170-186, August.
    19. Shibashish Mukherjee & Sorin M.S. Krammer, 2024. "When the going gets tough : Board gender diversity in the wake of a major crisis," Post-Print hal-04522722, HAL.
    20. Gonçalves, Judite & Pereira dos Santos, João, 2020. "Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption," Social Science & Medicine, Elsevier, vol. 264(C).

    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:59:y:2021:i:1:p:95-118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.